Budget 2026: Tax advantaged employee share schemes

• 28 October 2026
• Uncategorized

The Budget 2026 announced that the following changes will take effect for options granted on or after 6 April 2027. 

Company Share Option Plan (CSOP) rules allow companies of any size to grant tax advantaged share options of up to £60,000 to each employee. There are no income tax or national insurance charges on qualifying options or their exercise as long as the employee exercises the option within ten years, and: 

• at least three years have elapsed since the date of grant, or  

• within six months of cessation of employment as a “good leaver”, or  

• within 12 months of death (by their personal representatives), or 

• within six months of certain cash takeovers. 

This value is being increased to £120,000, the ten-year exercise period is extended to 15 years. 

Previously, there was in effect an “aggregate” cap of £250,000 on Enterprise Management Incentives (EMI) and CSOP grants of £250,000 as EMI had a hard cap of £250,000 and CSOP grants counted towards this figure. The Government has now pledged to scrap this interaction, so EMI and CSOP limits can operate independently. 

The EMI exercise window following disqualifying events will also be extended to 180 days to give EMI holders more time to take steps to protect their tax advantaged status.  

Share option compliance is a complex area which comes up regularly on M&A transactions. If you are buying or selling a company that has a tax advantaged share scheme in place, or are an option holder and are concerned about maintaining your tax relief, please do contact a member of our team.